Occupy Russia

An Occupy Wall Street campaign demonstrator stands in Zuccotti Park, near Wall Street in New York October 17, 2011. Source: Reuters / Vostock Photo

Is Russia immune to Occupy Wall Street because its disaffected young people have the possibility to emigrate?

In recent days, the Occupy Wall Street movement has spread to some 80 countries all over the world as hundreds of thousands of people protest against corporate greed and the global financial system.

But the movement remains rather incoherent, with the usual collection of anarchists, anti-globalists and the like, which are all too typical of rallies outside G20 and other major “establishment” meetings.

Equally typical for such events, none of the protesters seems to have thought through the anger – they have put forward no new economic ideas or any alternatives, let alone viable policy solutions. Indeed, they show no real understanding of wealth creation in the first place. If not by the major corporations, whose products they all use and enjoy, then by whom? The state? This alternative was tried in the 20th century, usually with catastrophic consequences.

It is ironic that among many of the protesters, multi-billionaire businessmen such as Britain’s Richard Branson of the Virgin Group or the late Steve Jobs of Apple enjoy iconic status, in no small measure due to their image and trendy services or products. It’s a tough trick to pull off, but one that other companies and CEOs ought to try emulating.

The current crop of Western protesters are a far cry from their predecessors of, say 1968, who were mostly well-off and well-educated university students very familiar with philosophy, the Frankfurt School and Herbert Marcuse’s critique of both American capitalism and Soviet communism. In his 1964 book “One Dimensional Man: Studies in the Ideology of Advanced Industrial Society,” Marcuse argues that each system had developed new repressive techniques and fostered false needs, aided and abetted by “Mad Men” in the West, where revolutionary fervor had collapsed.

But today, despite Western military involvement in three countries – Iran, Afghanistan and Libya – there is nothing comparable to the antiwar and anti-nuclear sentiment characteristic of the 1960s.

That the young are frustrated at their poor prospects is understandable, but Western economies are changing profoundly, with countless jobs being outsourced to India and China – and it is not just low-wage manufacturing labor that is going, but also expensive and high-tech services such as IT and back office functions.

Western countries desperately need to come up with new models of doing business, but they will find it increasingly hard to remain high up the value chain and ahead of emerging markets if they continue incompetent educational policies and continue to cut research funding. The risk of a long-term decline in jobs in the West looks very real.

So far, the Occupy Wall Street movement has not reached Russia, but there is no doubt that the government is rightly very concerned. Long before the current protests began, Prime Minister Vladimir Putin often claimed that against the background of street unrest in Europe, and especially in Greece, Russia’s own stimulus and rescue package was wholly justified and the right policy response.

At a meeting of the consultative committee for foreign investment this weekend, Putin said that Russians must feel that things were changing for the better in the country, otherwise they too would be out on the streets as in Europe and the U.S., where “hundreds of thousands are making demands that the governments of those countries are not in a position to meet.”

Nevertheless, Putin assured the investors, the government had no intention of changing its economic policy, claiming: “We understand the importance of sustainability and predictability.”

This has led some Russian observers to detect a change in Putin’s message from increasing spending – especially in the run-up to the parliamentary and presidential elections, which he said would not happen – to a more cautious approach, which seems to contradict President Medvedev’s aim to increase expenditures, especially on the military.

There are several likely reasons why Occupy Wall Street has not reached Russia – so far. Most obviously, Russia’s financial position is, on the face of it, much stronger than in most developed countries, with a big trade surplus and the third-biggest gold and foreign currencies in the world.

But this is, of course, largely a function of Russia’s export-oriented, commodities-based economy. Oil and gas employ relatively few people, but in recent years have made possible state largesse in the form of considerable social spending increases. This is good news for the economically naïve who remain largely unaware of Russia’s deep structural problems and lack of diversification, but has also resulted in vulnerability to a collapse in commodity prices in the event of a global slowdown or recession.

Another reason for Russians’ passivity is that while “social conscience” and awareness among the current global protesters might be much lower than among the 1960s generation, they are even less developed in Russia, whose population is notoriously cynical, believing that they can do nothing against “the system” anyway.

Russians are far more used to far more blatant abuses of the politics-money nexus than people in the West where, until recently, increasing nominal wealth diverted attention from the huge build-up of debt.

Russia is also a “new” and emerging economy, so its financial system is still poorly developed, and mortgage and consumer debt has not reached anywhere near the proportion it has in countries such as the U.S., UK, Ireland and Spain. As a result, Russians are much more “debt proof” than the Western public.

In addition, well-qualified young Russians have a convenient outlet – they can always emigrate to the West, an option not available to their counterparts in London, New York, Madrid and Rome.

It remains to be seen whether Occupy Wall Street will continue extending its reach and whether it will represent a real challenge to the status quo.

It also remains to be seen whether it will reach Russia at all. For the moment, Russia’s oil, gas, trade surplus and currency reserves give it a big safety cushion.

But as history has often shown, systems that have looked stable for years or decades can collapse very quickly – and the trigger is by no means always economic disaffection.

Ian Pryde is Founder and C.E.O. of Eurasia Strategy & Communications in Moscow.

Published by Russia Beyond The Headlines at http://rbth.com/articles/2011/10/18/occupy_russia_13587.html

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